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The trusts function like mutual funds, and are exempt from corporate income tax as long as they pass on at least 90 percent of their taxable income to shareholders through dividends.

But critics note many of those shareholders don’t live in Hawaii and don’t pay taxes here, and contend that the state is missing out on millions of dollars in revenue by giving out-of-state investors a tax break.

For example, major shareholders in General Growth Properties, a real estate investment trust that manages Ala Moana Center, include Brookfield Asset Management Inc., a multi-billion-dollar asset manager based in Canada, and Abu Dhabi Investment Authority, the sovereign wealth fund of the Emirate of Abu Dhabi.

After two years of debating a proposal to require REITs to pay corporate income tax — something that only the state of New Hampshire mandates — the Hawaii Legislature set aside $100,000 last year to study the impact of REITs.

Gov. David Ige released $90,000 in September 2015 and a contract was awarded to SMS Research on Dec. 8. The study is expected to be completed in May.

In the meantime, the state Department of Business, Economic Development and Tourism released an interim analysis based on existing data available on real estate investment trusts, including tax data from 2009 to 2013 from the state Department of Taxation.

The report’s findings include:

“In Hawaii, 36 REITs were identified operating in the state in 2014. Only one REIT had its main office in Hawaii

“50.8% of the assets were in the retail industry and 24.7% were in hospitality related industries.

“Hawaii dividend income exempted from corporate income tax was estimated to be $256 million in 2014.

“Assuming 95% of the REIT dividends were distributed to shareholders, the corporate income tax forgone was estimated to be $16.3 million in 2014.

“According to the estimate from DOTAX, REIT net income increased 2.6 times between 2012 and 2013, from $79.9 million in 2012 to $208.8 million in 2013.

“The retail sales generated from REIT properties in Hawaii (50.8% of the total REITs) generated an estimated $207 million in State General Excise Tax (GET) in 2014.”

Michael Fergus, a local businessman who has been advocating to eliminate REITs’ dividends-paid deduction, criticized the state’s analysis for excluding the revenue that could be gained from taxing the sales of REIT-owned property.

Company filings show that General Growth Properties sold 37.5 percent of its interest in Ala Moana Center last year and gained nearly $1 billion from both sales.

“There are winners and losers in this and Hawaii is a loser,” Fergus said.

State researcher Eugene Tian said the potential tax revenue gained from that sale wasn’t considered in the interim report part because the analysis did not cover the year 2015. He also noted that the study was constrained by the type of data available to the Tax Department.

“We wouldn’t be able to theorize about what potential revenue would be gained,” said Mallory Fujitani, spokeswoman for the Department of Taxation. “There are so many different hypotheticals you could create that it would be impossible for us to do.”

Dara Bernstein, vice president of the National Association of Real Estate Investment Trusts, which lobbies nationally on behalf of REITs, said in a phone interview that “the preliminary report supports our position that the Hawaii corporate income tax doesn’t produce a lot of revenue.”

The national organization hired six local lobbyists and spent about $15,000 from January to April last year fighting the elimination of the tax break, according to disclosure forms filed with the State Ethics Commission.

The company also created a website in December dedicated exclusively to providing information about real estate investment trusts in Hawaii.

The issue is likely to be debated again this year. The Hawaii Future Caucus, a bipartisan group of legislators under 35, introduced a bill that would remove the dividends-paid deduction for REITs for the next 15 years, with an exception for money gained from affordable housing.

“Given the State’s affordable housing crisis, action must be taken sooner, rather than later, to provide more revenue to the State and relieve the pressures of this crisis,” the bill says.

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